Shares of CBL & Associates Properties, Inc. CBL are trading up more than 5 percent after Jeffries analysts upgraded it from Hold to a Buy rating. The analysts boosted the price objective from $10.50 to $16.
The brokerage believes the stock can't be ignored as the execution makes it too cheap. The analysts aren't worried about the issues that CBL is facing due to the retail environment. Jeffries thinks the risk-reward is favorable citing valuation apart from its view that portfolio enhancement would continue next year.
The analysts pointed out there is no impact on CBL following the completion of the SEC investigation. The company is at an advantageous position to reposition its vacant stores after Sears started closing stores in an orderly manner.
"Improved SS NOI, coupled with improved portfolio quality and an improved balance sheet suggest the stock should experience multiple expansion from current levels (5.5x P/FFO) to closer to historical levels (7.7x P/FFO)," the analysts said in a note.
The brokerage cited the improvement of the portfolio quality and that the expansion in multiples would follow suit.
The analysts think the stock's risk would come in the form of any sudden store closings/bankruptcies compared to an orderly restructuring.
The stock traded up by $0.79, or 5.97 percent, to $14.03.
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